Why Costco Stock Split Remains Unlikely Despite Soaring Share Price

The momentum surrounding stock splits has emerged as one of Wall Street’s most compelling market narratives in recent years. While artificial intelligence continues to dominate headlines among investors, the anticipation of companies announcing forward splits—where a company reduces its nominal share price to make purchasing more accessible—has become a surprising secondary force driving index performance higher. This euphoria stems from historical data: since 1980, companies completing forward splits have averaged 25.4% returns in the year following their announcement, significantly outpacing the S&P 500’s typical 11.9% annual return.

Given these impressive figures, speculation has naturally turned toward which premium-priced stocks might become the next to announce a split. Two names consistently appear in these conversations: Costco Wholesale, approaching $1,000 per share, and Netflix, trading close to $1,300. Both companies possess the superficial characteristics that might suggest they’re ripe candidates. Yet a closer examination reveals why both firms are unlikely to join Wall Street’s 2025 stock-split parade, despite what their eye-watering share prices might suggest.

The Stock Split Advantage That May No Longer Apply

On the surface, Costco presents a compelling case for a forward split. The company hasn’t completed a split since January 2000, meaning its share price has compounded substantially over the past 25 years. For everyday investors without access to premium brokerage services, the cost barrier to purchasing a full share would have seemed genuinely prohibitive a generation ago.

However, the retail investment landscape has fundamentally transformed. During a recent investor conference, Costco’s Chief Financial Officer Gary Millerchip addressed this exact question directly. His response revealed the core issue: the economic arguments that once justified splits are now “a little bit less clear.” The advent of fractional-share purchasing—now standard across most major brokerages—has eroded a primary justification for conducting a split. While management acknowledges the psychological benefit of seeing a lower nominal price, this advantage no longer feels urgent enough to warrant action.

Millerchip’s candid assessment suggests that unless Costco’s board perceives that employees or retail investors are materially disadvantaged by the current share price, a split announcement remains improbable. The practical accessibility that fractional shares provide has shifted the calculus substantially. What once moved the needle on management decision-making has become a rounding error.

Netflix Faces a Different Structural Challenge

Netflix’s situation presents an entirely different obstacle—one rooted in shareholder composition rather than accessibility. As of mid-2025, institutional investors held approximately 80.2% of Netflix’s outstanding shares, while retail investors accounted for roughly 19.8%. This concentration matters enormously because forward splits are historically driven by retail demand, not institutional preferences.

Large institutional investors—hedge funds, passive index funds, and custodial banks managing vast portfolios—have absolutely no need for lower nominal share prices. They execute trades in fractional amounts routinely, operating in a completely different universe from retail investors concerned about purchasing power. An institution managing billions in assets treats a $1,300 share price identically to a $130 share price; the economics are identical.

The modest silver lining for Netflix is that 19.8% retail ownership, while relatively low, isn’t negligible. For comparison, companies like AutoZone, FICO, and Booking Holdings—all sporting considerably higher share prices—have retail ownership hovering around 10-11%, representing an even bleaker scenario for split consideration. Netflix’s retail shareholder base, while smaller than many megacap tech companies, theoretically provides some basis for potential future action, though meaningful change seems distant.

The Broader Pattern Emerges

These situations highlight a critical but underappreciated reality about modern stock splits: they’re not driven primarily by share price levels but by investor demographics and accessibility infrastructure. The traditional narrative—expensive shares necessitate splits—has become oversimplified in an era where fractional purchasing is ubiquitous. Costco’s situation exemplifies this shift, while Netflix’s institutional dominance reveals another often-overlooked constraint.

For investors hunting for the next stock-split announcement, focusing exclusively on nominal share price misses the more complex machinery driving these decisions. Management’s strategic priorities, shareholder composition, and existing accessibility tools paint a more complete picture than price alone. While 2025 may bring additional splits from other companies, Costco and Netflix remain improbable members of that cohort, regardless of their impressive valuations.